Gold: Hawkish Fed delays Gold recovery path – Commerzbank

Commerzbank’s Carsten Fritsch and Thu Lan Nguyen note that the Gold price has dropped nearly 30% from its January record as higher real yields and hawkish Federal Reserve expectations weigh on the metal. The bank cuts its year-end Gold forecast to USD 4,500 per troy ounce, but still projects a move to USD 5,000 by end-2027 if Fed rates stay unchanged and later fall.

Forecast cut but recovery seen later

"We are lowering our year-end gold price forecast to USD 4,500 per troy ounce (previously: USD 4,800). This reflects the significant fall in prices, which can be attributed to the Fed adopting a more hawkish stance than expected."

"Nevertheless, there is potential for the gold price to recover from its current level, as we consider current market expectations of Fed rate hikes to be excessive and anticipate that Fed interest rates will remain unchanged until the end of the year."

"In this scenario, the Fed would likely refrain from raising interest rates and might even cut its key interest rate from mid-2027 onwards, as the 2% target would then be reached in spring 2027. This provides scope for a further price increase next year to USD 5,000 per troy ounce by the end of 2027 (previous forecast: USD 5,200)."

"However, without a reversal in interest rate expectations, a lasting return of ETF investors and a recovery in the gold price are unlikely."

"As long as this remains the case, gold is unlikely to benefit disproportionately from increased demand for safe havens."